FINANCING & BUDGETING • December 30, 2014
3 minutes Read
By Gene Marks
Small business influencer Gene Marks is a guest blogger for CAN Capital. He is a celebrated author, columnist and small business owner.
It’s very natural for people running their own businesses to worry. And many of my clients are, right now. It’s December as I write this. The year is closing down. The holidays are in full swing. And 2014 is behind us. Many of us are already thinking about 2015. What will that year be like? Where will our revenues come from? Actually, the answer is easier than you might think. Take a look around. It’s your existing customers.
Lots of studies have been conducted that compare the cost of acquiring a new customer vs. selling to an existing customer. Some say the cost is five times more, others put it at six to seven times more. The probability of selling to an existing customer is 60-70 percent while the probability of selling to a new prospect is 5-20 percent, according to other research. There’s your 2015 answer. You need to drive more revenues from your existing customer base. The question is how. Here’s how.
First, start with your customer data. You need a report from your accounting system that shows you sales by customer for 2014 vs. 2013. Spend some time with that report. Start with your top 20 customers by sales this year. Ask yourself why did they buy from you this year? Also pick out the top 20 customers who experienced the most sales losses from 2013 to 2014. Ask yourself why did they buy less from you this year? These 40 customers represent your initial 2015 target list.
Next, turn to your products and partners. Make a list of your products. Think of all the custom work you’ve done in the past. List out all the services you’ve performed for your customers. List all the products and services you could be providing if you were just asked. Also, make a list of partners and friends of your business. These are companies and people that provide complementary products to yours. If you’re a roofer you’ve probably got masons and gutter firms you rely on. If you sell packaging materials I bet you outsource work for coating or folding. If you’re a restaurant owner you may outsource your desserts to a bakery. These are all potential sales to your customers that you could be doing and making a profit on. At the very least, they could be good introductions to make which will delight not only your customers but your partners too.
Now turn back to that customer list. Go through that list and think: how can I help these customers? What products and services can I be selling to them in 2015? Maybe these products and services come from you. Maybe your partners. It doesn’t matter. You can make money either way. You already know these customers. You have relationships. The door is open. Reach out to each and every one of them individually (there’s only 40 for goodness sake) with a customized plan: “I’ve been thinking about you and your business and I have some ideas that will help you,” you say. Take them out to lunch, visit their offices personally. Give them ideas. Help them grow. Offer complementary products, add-ons, or additional services that you or your partners provide. Make it a point to grow your relationship 10 percent over last year. But first make it a point to help them.
You’re not done. Go down the list of your customer sales from 2014 and 2013 that you analyzed above. Pick the next 100 customers who were biggest in 2014 and the next 100 whose sales dropped the most from 2013. Put them in your customer relationship database with their most current contact information. Create a field in this database called “proposed product/service”. Go through each customer and think of just one product or service they could use that would help them and complement what they already buy from you. Create a quarterly email campaign, with customized messages using that data, to reach out to those customers and recommend those products and services. Sprinkle in a few phone calls from your sales people, too. Watch what happens – a certain percentage will raise their hands, will appreciate your reaching out and will buy from you.
Want to grow your business in 2015? It won’t be easy. It never is. But you’ve got a head start. You’ve got a bunch of happy customers. So before you go out searching for more, make sure you’re driving every bit of revenue from them.